Watch US Inflation for Hidden Price Boost: The Green Week Ahead

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Watch US Inflation for Hidden Price Boost: The Green Week Ahead



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Photographer: Lisette Morales / Bloomberg

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A wave of U.S. economic reports this week could signal the underlying strength of growth and inflationary pressures as the country thaws from the coronavirus crisis begins to spread.

One of the most watched reports will be the Consumer Price Index, data for March is expected to show a dizzying acceleration from last year’s pandemic conditions. Economists can focus on the monthly change to gauge momentum, however, with a forecast gain of 0.5%.

Pay more

Consumer prices in the United States are rising at a faster rate as the country emerges from the pandemic

Sources: US Bureau of Labor Statistics, Bloomberg survey

Investors are watching these numbers to determine the likelihood of high price pressures becoming self-sustaining, in a possible context. supply chain constraints, massive fiscal and monetary incentives and pent-up consumer demand.

The March retail sales report will likely confirm this demand theme, which has prompted economists to raise growth forecasts for this year. Their median estimate predicts a 5.5% increase in purchases after a depressed February with winter weather conditions.

Meanwhile, industrial production in factories, mines and utilities nationwide is expected to rebound strongly, thanks to robust manufacturing. Factory production is expected to increase by 4%. As lean inventories and strong demand bolster manufacturers’ order books, material shortages, high input prices and shipping delays complicate production efforts.

At the end of the week, the government will release its housing starts report for March, which may have rebounded from February when winter storms delayed construction efforts. While home sales have shown signs of stabilizing, arrears from home builders remain significant.

What Bloomberg Economics Says:

“Tight pockets of high demand and localized supply chain disruptions will create price spikes in a limited subset of categories. However, the most dominant factor containing inflation will come from excessive labor shortages and the resulting absence of increasing wage pressures. “

–Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger. For a full analysis, Click here

Elsewhere, a large number of Federal Reserve and European Central Bank officials are due to speak ahead of periods of calm for the two central banks and the World Trade Organization holds a meeting with vaccine makers on restrictions on the ‘export. Turkish observers will closely follow the interest rate decision on Thursday.

Central bank rate decisions this week

Click here to see what happened over the past week and here’s our roundup of what’s happening in the global economy.

United States and Canada

Investors will be watching a phalanx of Fed speakers this week before entering a period of silence ahead of the meeting. President Jerome Powell will address the Economic Club of Washington on Wednesday and at least seven of his colleagues are expected to make appearances. The Fed’s Beige Book – a compendium of assessments of economic and trade activity in each of the central bank’s 12 regions – is also expected.

In Canada, the quarterly business climate survey will be the central bank’s last data point before its April 21 decision.

Asia

China’s trade data on Tuesday is expected to show another increase in exports and imports in March compared to a year earlier, when Covid restrictions further hampered trade. On Friday, industrial production, retail sales and investment data for the same month and GDP figures for the first quarter are all expected to increase for the same reason.

The central banks of New Zealand, Singapore and South Korea all have meetings, with no expected change in their key policy parameters, according to early responses from economists to the survey.

Europe, Middle East, Africa

Data for the next few days will begin to show how the region fared in the first quarter at a time of new lockdowns and varying vaccine efforts.

In the UK, gross domestic product likely rose in February, but by an amount too small to offset the 2.9% drop the month before. Meanwhile euro zones industrial production is expected to decline in February, with data from national statistical offices so far indicating a decline in the sector.

The coming week offers ECB policymakers one last chance to air views before a period of silence begins before their April 22 meeting. President Christine Lagarde will be part of the list of speakers scheduled for the next few days. Board member Fabio Panetta said in an interview published on Sunday that two years of economic expansion in the euro area definitely lost.

Elsewhere in Europe, Serbia’s central bank is likely to keep its interest rate unchanged, while Ukrainian monetary officials may continue to tighten policy as inflation rises and a deal with the International Monetary Fund remains far away.

The upheaval of the Turkish central bank

In Turkey, the new central bank governor, Sahap Kavcioglu, is expected to keep the benchmark rate at 19% during his first monetary policy meeting on Thursday. He has fought to convince investors with a commitment to strict monetary policy after his predecessor was fired following a 200 basis point hike last month.

Uganda could maintain its policy rate for a fifth consecutive meeting on Wednesday and on the same day the Bank of Namibia will likely leave its rate unchanged also after its South African neighbor held in March. Namibia’s benchmark index is 25 basis points higher than South Africa’s, which helps protect the country’s reserves and currency peg.

Latin America

The hesitant nature of the recoveries in Colombia and Brazil should be exposed by their February retail sales reports, as the former once again imposed restrictions to contain the virus while the latter’s national health crisis worsened .

Employment reports in Mexico, Brazil and Peru can also be expected to highlight the damage inflicted by the pandemic. Millions of workers in the region’s two largest economies remain on the sidelines, while the labor market in the Peruvian capital, the mega-city of Lima, is at last year’s low but remains far from its shape pre-pandemic.

Laid low

The labor market in Lima, the capital of Peru, is far from close to its pre-pandemic level

Source: National Institute of Statistics and Information

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